Commentary

Barbie Shows She Can Be Resilient

The ladies are bringing a bit of pre-holiday-season cheer to Mattel, with Barbie sales soaring 16% during its third quarter and American Girl rising 14%. Although the results exceeded most analysts’ expectations, worldwide net sales for all of its brands combined — which include Fisher-Price, Hot Wheels, Matchbox, Construction and Arts & Crafts Brands, Radica and Games — were flat, the company reported.

“The results reflect a comeback for Barbie, which Mattel revamped with different body types, including more realistic versions with curvier hips and shorter legs,” observes Bloomberg’s Nick Turner. “It also underscores a broader resurgence in girls toys. Hasbro, which began offering Disney Princess products this year after winning away the franchise from Mattel, saw sales at its girl-focused division jump 57% last quarter. Its boys’ products grew just 2%.”

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The loss of the Disney business, which includes dolls based on classic princess characters and from the hit movie “Frozen,” left a sales gap of $439.9 million for the year, including $158 million in the third-quarter, points out Paul Ziobro for the Wall Street Journal

More critically, “the results set up Mattel as it enters the all-important holiday season, when around 50% of annual toy sales are made,” Ziobro writes. “The U.S. toy industry is in the midst of a strong stretch, with sales projected to rise 7% this year after a 6.7% increase in 2015, according to the research firm NPD Group Inc.”

“In January, Mattel rolled out Barbie dolls in a variety of skin tones, hairstyles and outfits and in three new body shapes — tall, curvy and petite — to appeal to a larger demographic,” Reuters’ Gayathree Ganesan reminds us

“The launch of the new range followed two years of declining sales of Barbie dolls around the world as girls increasingly turn to other dolls, electronic toys and tablets. The company had also changed its marketing strategy to position its dolls as more than a pretty face, with ad campaigns such as ‘You Can Be Anything’ highlighting the potential of women in various professions,” Ganesan writes.

“We continue to make some very good progress,” CEO Christopher Sinclair said during a call with analysts transcribed by Seeking Alpha. “We continue to see real strength in our core brands.”

Sinclair has been CEO since January, when Mattel fired Bryan Stockton. It “also brought back Richard Dickson, who was credited with Barbie’s last surge in popularity around 2010, as chief operating officer. Analysts have credited Dickson with injecting innovation back into the company that had become known for its bureaucracy,” Shan Li reports for the Los Angeles Times.

“We knew going into this year that our Barbie strategies had to work almost perfectly; so far they have,” said Dickson on the call. “We're seeing very broad based performance from the new styling in our Fashionista line, the I Can Be segment that exemplifies the brand’s positioning and to our new Dreamtopia that is capturing imagination of younger girls.”

Worldwide gross sales for Mattel's girls and boys brands were down 5% to $1.06 billion, reports Billy Langsworthy for Toy News. “Worldwide gross sales for Mattel's other girls brands were down 50%, but gross sales for the firm’s wheels category, which boasts includes the Hot Wheels and Matchbox brands, was up 6%. Worldwide gross sales for Fisher-Price were $661.5 million, up 6%, while worldwide gross sales for Mattel's entertainment business, which includes Radica and Games, is up 16% on 2015. Gross sales for Mattel's construction and arts and crafts brands, which includes the Mega Bloks and  RoseArt brands, were $118.6 million, flat year-on-year.”

Mattel stock rose 4.5% after-hours trading and is up more than 13% for the year. 

“I was expecting them to do a little bit better, but sales in all categories but ‘other girls’ were strong,” BMO analyst Garrick Johnson toldBenzinga’s Brett Hershman. “Gross margin was in-line with their guidance (which was a concern for a lot of investors). While not a blowout by any means, it's just enough to keep the turnaround story going!”

Which could, in turn, make for a merry Christmas in El Segundo, Calif., where Mattel — and its perennial teenager — claim to be “creating the future of play.”

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